Prince William arrives in the Falkland Islands

His arrival had been debated and discussed for many months in the windy
Atlantic outcrop. But Prince William finally landed on Falkland Islands soil
last week, becoming the first member of the Royal family to visit since
Princess Anne travelled to the territory five years ago.

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A spokesman for the MoD said that the Duke’s first shift involved 'briefings on the unique and challenging flying environment of the Falkland Islands and familiarisation with the location and the job he is to perform.'Photo: PA/MoD

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The Duke, or Fl Lt Wales as he is known within the RAF, is part of a four-man crew that will provide search and rescue cover for both civilians and the military during the next six weeks

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Squadron Leader Miles Bartlett, the Officer Commanding Search and Rescue, said: 'A posting to the operations in the Falklands is a vital part of the career progression for a Search and Rescue pilot.'Photo: PA

Flight Lieutenant Wales, as he is known, will be spending six weeks on the islands as a RAF helicopter pilot, in a tour of duty which the Ministry of Defence insists is a routine deployment.

But the visible presence of the prince in the Islands, with the first photographs of him at work released yesterday, comes at a moment of heightened tension between Britain and Argentina.

The Royal Navy has dispatched one of its most advanced warships, HMS Dauntless, to the region and yesterday it was reported that David Cameron had personally authorised a nuclear submarine to patrol the waters. The sub reportedly carries a team of Spanish speakers to monitor regional communications, and cruise missiles to deter Argentina’s military.

Angry Argentines have burned British flags in protest at the prince’s arrival, and his deployment to the Falklands triggered outrage from Buenos Aires as tensions grow ahead of the 30th anniversary of the Argentine invasion in April. The country’s foreign ministry expressed regret that an heir to the throne would arrive wearing “the uniform of a conqueror”.

But it is the prospect of an oil bonanza in the waters off the Falklands that is really fuelling the anger of Cristina Kirchner, the Argentine president who has made the islands her top foreign policy priority.

British officials in the region believe that she is planning to push for a full-fledged economic blockade of the islands by threatening the only commercial air link – a weekly flight from southern Chile.

Argentina already cajoled its South American neighbours into banning Falklands-flagged ships from their ports. William Hague’s advice that the vessels can circumvent the ban by raising the Red Ensign instead only deepened Argentine irritation.

“The Kirchner government has made clear that it will intimidate private companies in South America that do business with the Falklands,” a senior British diplomat told The Sunday Telegraph. “They seem to consider any commercial links with the islands tantamount to regional treachery.”

Entrepreneurs on the islands said that similar pressure was already being deployed against freight container companies, to which it has privately been made clear that they will lose lucrative contracts if they do business with the Falklands

“The Argentine government rails against the blockade of Gaza and the sanctions against Cuba, but they have no compunction about trying to force their neighbours to cut us off, “ said Roger Spink, president of the chamber of commerce. “It’s collective punishment of a civilian population.”

For islanders long accustomed to sporadic shortages, the currently lack of peaches, grapes and eggs is just another inconvenience. But many believe that they should use expected oil riches to defend themselves against commercial bullying by Buenos Aires, possibly by establishing an alternative air link via Miami.

“The real reason people here are excited about oil is that it will give us some extra clout and influence and restrict the ability of the Argentines to try and push us about,” said Lisa Watson, editor of Penguin News, the weekly newspaper.

Yet just three decades ago, even islanders say that the territory that British forces liberated from the short-lived Argentine occupation was a failing, feudal and forgotten relic of Empire.

The economy was dependent on the wool market, farms were owned by absentee overseas landlords and islanders would watch as fishing fleets from around the world helped themselves to lucrative trawls of squid and fish from their waters.

But even before the prospective oil boom, the island economy has been transformed, growing 30-fold in 30 years - thanks to the sub-division and sell-off of farms to islanders, a surge in cruise ship tourism and the establishment of conservation waters to create a thriving fishing industry which supplies more than half the calamari served up in European restaurants.

GDP has soared from £3.5 million in 1982 to more than £100 million today – a figure that is likely to rise again when oil starts to be pumped, expected from offshore wells in the middle of this decade.

Sian Davies, one of three “war babies” born on the Falklands during the invasion, is typical of the young islanders who might in the past not have returned to the Falklands after taking A-Levels and university in Britain, paid for by the islands’ government.

“Before the war, young people were leaving in droves,” said Miss Davies, 29, who manages a gift store on the Stanley waterfront.

“I always wanted to come back, it’s that type of place, but financially I am now confident that I have a future here. That was not always the case.”

Nowadays, the capital’s population of about 2,000 people swells to more than double when a cruise shop lays anchor offshore. On other days, it returns to its sleepy small town status, although the new housing developments and expanding oil support facilities bear testimony to its changing face.

“There’s definitely much more of a buzz around town of late,” said Carl Stroud, managed for 10 years of the Malvina House hotel, its title drawn from a popular Scottish girl’s name of a century ago, rather than the Argentine name for the islands (Las Malvinas).

In the hotel, Norwegian and Scottish oil rig workers tuck into squid and lamb while US energy executives recently jetted into town from Houston for buy-up talks.

But even amid this fast pace of change, reminders of Britain are everywhere, from the Union flags to the Marmite in the shops and the British-style pubs serving Cornish pasties beneath the dart-boards.

Indeed, this is not a place for conspicuous consumption and locals have no desire to build a new “Dubai” in the South Atlantic. The millionaires already created by the fishing boom are not wearing designer clothes or driving around in Ferraris, although there are plenty of new Land Rovers on the roads.

But despite the propaganda line from Buenos Aires that Britain is only interested in the islands because of their natural resources, the oil and gas reserves within the 200-mile territorial zone belong entirely to the Falklands.

The islands’ government has sold exploration licences to several companies and will levy a nine per cent royalty fee on the value of all oil and gas that is produced, and a 26 per tax on company profits.

The islands are looking at establishing a sovereign wealth fund to invest the income so that it will benefit future generations long after the oil has run out. And if the funds become available, they will pick up the bill for the defence of the islands, estimated at about £110 million a year (0.5 per cent of the annual defence budget).

“We are aware that some people in Britain might be thinking 'why should we be supporting them if they are all getting very rich’ so it’s important for us to send the message that we won’t be ungenerous,” said Mike Summers, a Falklands assemblyman.

The waterfront 1982 war memorial is visible behind him through the windows of government offices – an immediate reminder of those who died to liberate the islands from their 74-day Argentine occupation.

But Mr Summers said this year’s Liberation Day on June 14 would be a time to look forward as well back.

“It is important for us to be able to show veterans and the families who visit that the huge sacrifices they made in 1982 were not in vain, but enabled the Falkland Islands to develop into a great success story.”